The Personal MBA

Master the Art of Business

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

Buy the book:


What Is 'Relative Importance Testing'?

Relative Importance Testing is a method that helps you determine what people actually want by asking them questions designed to simulate real life tradeoffs.

People never accept Tradeoffs unless they are forced to make a Choice. Since perfection doesn't exist, people happily settle for the Next Best Alternative.

By asking the participant to choose, you collect more accurate information about how the participant would respond when faced with a similar choice in the real world.

The more sets of questions each participant completes, the more clearly you’ll be able to judge the relative importance of each benefit.

Relative Importance Testing helps you define which benefits you should focus on to make your offer as attractive as possible.

Josh Kaufman Explains 'Relative Importance Testing'

The tricky thing about trying to figure out what people want is that people want everything.

Here's proof: bring together a group of potential customers for a focus group. Ask each participant to rate the importance of each of the nine Economic Values for your offering on a scale of 0 to 10. What will the results look like?

Regardless of your product or service, the results will be the same: everyone wants products that provide exceptional results instantly, every time, with absolutely no effort. Simultaneously, they want the offer to make them rich, famous, beautiful, and eternally blissful. They also want it to be free. If you ask them what they'd be willing to give up, they'll answer that everything is critically important, and they won't be happy with less.

The reality outside of the focus group is always quite different. Shortly after the group adjourns, each of those participants will go out and purchase something that's not free and not perfect, and they'll be happy with their decision. Why?

As a rule, people never accept Tradeoffs unless they're forced to make a Choice. If the perfect option existed, they'd buy it. Since there's no such thing as the perfect offering, people are happy to settle for the Next Best Alternative.

The best way to discover what people actually value is to ask them to make explicit tradeoffs. The problem with the hypothetical focus group was that it didn't ask the participants to make any real choices-the participants could have everything, so they wanted everything.

Relative Importance Testing-a set of analysis techniques pioneered by statistician Jordan Louviere in the 1980s -gives you a way to determine what people actually want by asking them a series of simple questions designed to simulate real-life tradeoffs. Here's how it works.

Let's assume we're conducting a Relative Importance Test for the diner previously mentioned. Instead of asking the participant to rank each benefit from 0 to 10, the participant would be shown something like the following:

A. Orders delivered to table in 5 minutes or less. B. Most entree prices under $20. C. Appealing restaurant decor. D. Large variety of menu options.

After this set is shown, the participants are asked the following questions:

  1. Which of these items is most important?
  2. Which of these items is least important?

Once the participant answers the questions, another set is shown:

E. Unique entrees I can't get anywhere else. F. Knowing I can always order my favorite dishes. G. People are impressed that I dine here. H. Large portions.

Random question sets containing 4-5 criteria are provided until there are no more possible combinations or the participant's attention wanders, which will typically occur around the 5-10 minute mark.

It won't take the participant long to provide a response to each of these simple questions, but the results are quite revealing. By asking the participant to make an actual choice, you're collecting more accurate information about how the participant would respond when faced with a similar choice in the real world. When the results are aggregated and statistically analyzed, the relative importance of each benefit becomes very clear. The more sets each participant completes, the more clearly you'll be able to judge the relative importance of each benefit.

Relative Importance Testing can help you quickly determine which benefits you should focus on to make your offering maximally attractive.

Questions About 'Relative Importance Testing'


"Things which matter most must never be at the mercy of things which matter least."

Johann Wolfgang von Goethe, nineteenth-century dramatist, poet, and polymath


From Chapter 1:

Value Creation


https://personalmba.com/relative-importance-testing/



WANT TO BE NOTIFIED WHEN UPDATES ARE PUBLISHED? Subscribe to Josh Kaufman's email newsletter. You'll receive Personal MBA updates, Josh's award-winning research, and useful resources that will help you make more money, get more done, and have more fun. It's free!

The Personal MBA

Master the Art of Business

A world-class business education in a single volume. Learn the universal principles behind every successful business, then use these ideas to make more money, get more done, and have more fun in your life and work.

Buy the book:


About Josh Kaufman

Josh Kaufman is an acclaimed business, learning, and skill acquisition expert. He is the author of two international bestsellers: The Personal MBA and The First 20 Hours. Josh's research and writing have helped millions of people worldwide learn the fundamentals of modern business.

More about Josh Kaufman →